MF Global trustees/administrators reach broad agreement

MFG UK agrees to return funds to MFGI estate

A broad agreement among the various entities administrating the MF Global bankruptcy was announced Saturday morning that resolves existing claims among the competing interests and will expedite additional distributions to former MF Global customers and claimants and provide certainty on the total value of claims against the estates.

The agreement was reached between James Giddens, Trustee for the Securities Investor Protection Act (SIPA) liquidation of MF Global Inc. (MFGI), and Richard Heis, a Joint Administrator of MF Global UK Ltd. (MFGUK) to resolve all claims between the two entities, including the 30.7 client assets and repo to maturity valuation disputes currently before the High Court of England. Giddens was seeking approximately $700 million from MFGUK. The agreement estimates that between $500 million and $600 million will be returned to the MFGI estate.

Simultaneously, Giddens and Louis J. Freeh, Chapter 11 Trustee for MF Global Holdings Ltd., et al, (MFGH), agreed to resolve all claims between their respective estates. Claims between MFGH and MFGUK have also been resolved. The agreements are subject to certain conditions and court approval, and suspend existing litigation.

According to the release, Giddens anticipates the possibility of 100% satisfaction of allowed securities customers' claims and significant additional distributions to commodities customers who traded on U.S. exchanges (4d funds) and commodities customers who traded on non-US exchanges (30.7 funds).

"These agreements are in the best interests of former customers and other creditors and allow us to request court approval for significant additional distributions for securities and commodities customers," noted Giddens in the release. "Resolving complex issues with these entities marks a critical milestone in administering the MF Global Inc. estate.

Giddens also announced that he is seeking to make a further distribution of customer claims. “Near-term distributions will be made available from customer property now in the Trustee’s possession, and future distributions will be from customer property recovered or returned in the future,” noted a release.

The distribution will cover both 4d and Part 30.7 claims and is subject to approval by U.S. Bankruptcy Judge Martin Glenn. To date former MF Global customers have received approximately 80% of 4d assets but only 5% of Part 30.7 assets that was the subject of the UK litigation.

Hearings on both the settlement agreements and further distributions are set for Jan. 31.

About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange. Dan joined Futures magazine in 2001, before the name change to Modern Trader, and in 2005 he was promoted to Managing Editor, responsible for overseeing all the content that went into Futures and futuresmag.com. Dan’s incisive reporting and no-holds barred commentary places him among the most recognized national media figures covering futures, derivative trading and alternative investments.